Setting up an LLC is different from state to state and Pennsylvania has its own set of rules. Pennsylvania LLC formation can be tricky to navigate, however, it can be done through this easy-to-follow walkthrough.
Before following the guide, it is important to register a name for the LLC. The naming guidelines can be found on the Pennsylvania Secretary of State website. Once a name has been registered, it is advisable to reserve a domain name for a website as well as set up social media accounts for marketing purposes.
Now that the LLC has a name, the below 5-step guide will provide all the important information you need to successfully start a Limited Liability Company in the “Keystone State”.
Step 1: Appoint a Registered Office or a Commercial Registered Office Provider (CROP)
The state of Pennsylvania requires all LLCs’ are required to provide a physical mailing address in Pennsylvania for receiving important legal documentation. The registered agent may be an individual, older than 18 years of age and a Pennsylvania resident.
A business entity may also serve as a registered agent on behalf of the LLC. The state will mail legal documents to the Commercial Registered Office Providers address who in turn will forward the document to the correct responsible person in the LLC.
Many businesses choose not to act as their own registered agent as it provides certain travel restrictions. The agent must be available at all times during regular business hours, which makes the use of a business entity a lot more convenient.
Step 2: Obtain a Pennsylvania Business License
Certain industries will require a special license to trade legally. The Department of State has a checklist that can be searched in order to ensure the LLC applies for the correct licenses or permits. Types of licenses that might be required are:
- Local licenses.
- Professional licenses for skilled occupations.
- Environmental licenses.
- Health and safety licenses.
- Zoning permits.
- Regulatory permits, such as liquor licensing.
- Sales tax permits.
Step 3: File the Certificate of Organization
The Certificate of Organization (DSCB: 15-8821) is filed with the Pennsylvania Department of State’s Bureau of Corporations and Charitable Organizations. LLCs’ that are established elsewhere, but want to obtain approval for doing business in Pennsylvania, can file a Foreign Registration Statement at a cost of $250.
A Docketing Statement (DSCB:15-134A) must be included with the Certificate of Organization. It requires the LLC to have an Employer Identification Number (EIN), which can be obtained from the IRS at no charge.
The documents can be submitted online or through the mail and take around a week for the state to process.
Step 4: Comply with Tax Obligations
Pennsylvania has made the tax application relatively easy through its PA-100 form. LLC must register for taxes with the Department of revenue in order to:
- Pay unemployment tax and withhold state taxes from employees
- Collect sales tax
- Get licensing for the sale of tobacco products
- Contribute to workers’ compensation
Pennsylvania also requires LLCs to file a Certificate of Annual Registration (DSCB 15-8221-8998). This must be done before the 15th of April each year and carries a cost of $560 per member of the LLC. All taxes can be paid through the state’s online portal.
Step 5: Open a Business Bank Account
One of the most important factors for a business is to keep its finances in order. This can be done by opening a business bank account to keep all business income and expenses separate from personal finances.
A business bank account will also allow the LLC to apply for a business credit card which should exclusively be used for business transactions. For future growth, the LLC may also want to apply for business loans as a means of injecting growth capital into the business.
Maintain the LLC
Maintaining a healthy business is key to longevity and success. Creating an Operating Agreement which is similar to a business plan is highly advisable in order to build a solid foundation from which the business can operate.
Protecting the LLC by securing relevant business insurance means that in the event of an accident, burglary, or natural disaster, the business, and its assets are secure. Many businesses without insurance have failed to recover after unforeseen events.
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